Kontoor Brands Sustainability Report: 2019 Table of Contents

CEO Welcome ...... 03 About Kontoor Brands ...... 04 Living Our Purpose ...... 05 Our Approach to Sustainability ...... 06 Governance ...... 07 Materiality Assessment ...... 08 Strategic Pillars ...... 10 Goals ...... 11 Planet ...... 12 Product ...... 16 People ...... 21 Appendix ...... 24

DISCLAIMER: The data in Kontoor Brands’ inaugural sustainability report includes the 2019 calendar year. Kontoor Brands became a standalone, publicly traded company in May 2019, therefore, some of the data in this report may not reflect only Kontoor Brands operations.

This report was not prepared in accordance with GRI Standards. For questions about this report, please contact [email protected] or visit our website at KontoorBrands.com.

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Kontoor Brands is a global lifestyle apparel company built on two of the world’s most iconic consumer brands – Wrangler® and Lee®. And with that standing comes responsibility.

Now with our first full year as a standalone publicly traded company behind CEO us, we are pleased to provide a foundational report on our sustainability progress and goals, along with our promise for a continued commitment to providing transparency on our efforts to create a more sustainable business Welcome for our Planet, Product and People. At the outset, we acknowledge that while we’ve accomplished much in a short period, there is much more work to be done.

To guide us, Kontoor’s approach to sustainable business activities is founded on our commitment to be a purposeful business.

Within that context, we’ve affirmed our commitment to doing business responsibly and sustainably – balancing financial success while striving to meet the needs of the communities we serve and the planet we share.

One of our core values is: We Do the Right Thing. We stand for each other, our consumers, customers, partners, shareholders and the planet. And, we earn the respect of others because we do what’s right, even when it is hard.

To achieve this, we will invest in sustainable business practices, we will test, we will learn, and we will share our breakthroughs with others so that our discoveries can be replicated and improved upon.

Our aspiration is to be a sustainability leader – not just based on what we say, but most importantly on what we do. This is hard work. It’s never-ending.

Through regular reporting, we expect that our words and actions will be “Our aspiration is to be a sustainability aligned and that our work in collaboration with others is making a difference. leader – not just based on what we say, We look forward to starting this new journey. Together, we will make but most importantly on what we do. the world a better place. This is hard work. It’s never-ending.”

Scott H. Baxter President & Chief Executive Officer Kontoor Brands Sustainability Report 2019 3 CEO Welcome About Kontoor Brands Living Our Purpose Our Approach to Sustainability Governance Materiality Assessment Strategic Pillars Planet Product People Appendix

About

Kontoor 15K Brands Employees Kontoor Brands is a global lifestyle apparel 10 company, with a portfolio led by two of Internal manufacturing facilities located in the the world’s most iconic consumer brands: Western Hemisphere Wrangler® and Lee®. We design, manufacture and distribute superior high-quality products that look good and fit right, giving people 164M around the world the freedom and confidence Units of apparel and to express themselves. accessories produced or sourced in 2019 Kontoor Brands is a purpose-led organization focused on leveraging its global platform, strategic sourcing model and best-in-class supply chain to drive brand growth and deliver long-term value for its stakeholders.

More about our organization can be found in our inaugural 2019 Annual Report.

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Purpose Why we exist We are the common thread that inspires people to live with Living Our passion and confidence. Purpose Mission Our purpose, mission and values What we do serve as our north star, guiding We grow our iconic brands through innovation, design and sustainable us on a journey to make a performance to excite more and positive impact on the world. more consumers.

Values

We Are Kontoor We Win Together We Do The Right Thing We are one team and we We have passion to win. We set ambitious We stand for each other, our consumers, embrace our unique differences. goals, consistently deliver and celebrate customers, partners, shareholders, community We understand, challenge, believe our success. We are built on a foundation and planet. We earn the respect of others in and learn from each other. of trust that ignites our entrepreneurial spirit because we do what’s right, even when it’s hard. and shapes our future.

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Our sustainability approach is aligned with our company’s focus on innovation, design and sustainable performance. It underscores our purpose to inspire people to live with passion and confidence. Through Our our three strategic pillars: Planet, Product and People, Kontoor Brands emphasizes protecting the environment, sourcing products and materials from Approach to companies that share our values, and operating with the highest standards of ethics and transparency.

Sustainability Kontoor’s Global Sustainable Business Team leads our enterprise-wide sustainability efforts, working closely with our stakeholder groups globally to ensure progress toward our goals.

Our Stakeholder Groups Building Stakeholder

• Communities • International & Local Engagement Globally • Consumers Organizations/Nonprofits Kontoor Brands values the voices of our internal and external • Customers • Suppliers & their Employees stakeholders. Through regular dialogue with our global • Shareholders & Investors • Employees group of diverse stakeholders, we can maximize our impact • Governments, • Trade & Industry and better align our business to social and environmental Associations Multilateral needs. We engage these stakeholders through one-on-one Organizations & meetings, expert forums, roundtable discussions, industry Regulators coalitions, surveys and inquiries, and formal partnerships.

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Governance

Kontoor Brands believes good governance is integral to achieving our sustainability goals and driving shareholder value. Sustainability is an enterprise-wide commitment informed by and integrated into our strategic priorities.

We focus on Planet, Product, People – key areas that align with our business strategy and where we can have the greatest potential for impact. Our north star is our Purpose, Mission and Values, which guide the actions of our 15,000 global employees.

Sustainability Policies and Enterprise Risk Council Standards Management Council

The Kontoor Brands Sustainability Council As a leader within the apparel industry, Our Enterprise Risk Management Council is champions our company-wide commitment to Kontoor Brands takes sustainability organized to identify, evaluate and manage sustainability performance and transparency. and responsibility seriously. We are risk topics and issues, in alignment with The Council, which consists of members from committed to sourcing products and Kontoor Brands’ business priorities. our Executive Leadership Team, our Global materials from companies that share The Council meets regularly and provides Sustainable Business Team and select working our values for human rights, ethics leadership on strategy, financial, operational, group leaders, meets bi-annually. The Council and environmental responsibility. compliance and reputational risk. promotes and guides progress toward Kontoor Our Policies and Standards can be Brands’ Global Sustainability Goals and fosters found at KontoorBrands.com. the company’s culture of sustainability.

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Kontoor Brands’ materiality assessment utilized The Global Reporting Initiative’s Principles for Defining Report Content* to identify our material Materiality issues, represented in the list below. The assessment was primarily based on a combination of internal and external stakeholder perspectives on Assessment material issues and their level of significance and priority.

There were three steps in the materiality assessment process:

1. Material Issue Identification and Design 2. Eliciting Stakeholder Feedback 3. Responding to Material Issues Material issues brainstorm & breakdown: Internal surveys & interviews: Internal discussion on results: Kontoor’s Global Sustainability Business Team Kontoor’s Global Sustainability Business Kontoor Brands senior leadership were discussed the landscape of salient material issues deployed an internal survey to the top presented with the materiality assessment’s and the best organization of the issues into eighteen leaders. This survey was followed results during an in-depth briefing about understandable groupings to present to stakeholders. up with one-on-one interviews to discuss the specific thirteen issues. individual responses on how Kontoor Brands business operations impact the world. Literature review of issues: Developing goals & strategies: External subject matter experts analyzed over 300 With guidance from Kontoor Brands senior contextually relevant articles on material issues and External stakeholders: leadership, the materiality assessment sustainability governance to inform the identification Kontoor’s Global Sustainable Business directly influenced Kontoor’s sustainability and organization of the issues. Additionally, specific Team collaborated with Polecat Reputational goal setting process. reporting frameworks such as GRI, THESIS Index and Services to define and customize the SASB were reviewed for relevant material issues. hierarchy of material issues. Utilizing this defined hierarchy, Polecat conducted a 180-day analysis on the most relevant online GRI materiality process & matrix review: and social media conversations related to Kontoor’s Global Sustainability Business Team the impact that a global apparel company reviewed GRI’s stated objectives, guidance and has on the world. Kontoor will supplement requirements while also evaluating dozens of digital global stakeholder perspectives with material issue presentations by our industry ongoing one-on-one discussions. peers, as well as those outside our industry.

*The Global Reporting Initiative’s Principles for Defining Report Content

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Materiality Assessment

The process identified and evaluated thirteen material issues that reflect our economic, environmental and social impacts.

• Agriculture • Animal Welfare • Biodiversity & Ecosystems • Business Ethics • Chemicals • Community Engagement • Corporate Governance • Energy & Climate • Equal Opportunity • Human Rights • Waste • Water • Worker Health & Safety

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Planet Our longstanding commitment to environmental Our stewardship and compliance unites with a vision of a more sustainable world. Strategic Pillars In 2020, we announced Product our strategic pillars and We strive to use sustainable suppliers, materials and sustainability goals to address operations for each of the millions of products we the environmental and social produce each year. impact of our operations, supply chain, products and people. We identified three areas in which we believe we can make a positive impact: Planet, Product and People. People We are committed to being active and engaged members of the communities where we operate and to collaborating with our suppliers for safe, secure workplaces for every person in our supply chain.

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Pillar Topic Goal Select Examples of Progress* Relevant SDG

Power 100 percent of owned and operated • Sign up for renewable energy power purchase agreements facilities with renewable • Evaluate on-site and community-based generation projects Energy energy by 2025

• Sign up for renewable energy power purchase agreements Establish a • Retrofit owned facilities with energy efficient lighting, science-based motors and HVAC equipment target by 2022 Climate • Research and publish carbon sequestration values for regenerative agriculture Goals PLANET • Build and regularly upgrade advanced wastewater In 2020, we announced treatment for owned manufacturing our first global Save 10 billion liters • Require suppliers to monitor wastewater treatment and of water by 2025 remediate violations sustainability goals Water • Collaborate in the commercialization of innovative dyeing to measure and processes under Indigood™ Foam Dyed Denim manage our progress. Additionally, we have Source 100 percent sustainable raw • Require suppliers to meet comprehensive sustainable aligned our goals with materials, including material policies the relevant United Forest-Derived and • Support regenerative agriculture research and training for Animal-Derived cotton producers Nations Sustainable Materials Materials by 2023, • Procure sustainable cotton through various sustainable Cotton by 2025 and management frameworks Development Goals. Synthetics by 2030 PRODUCT

Use 100 percent • Require supplier compliance with Restricted Substance List preferred chemistry • Use advanced chemical screening procedures by 2023 Chemistry • Replace unwanted chemistry with preferred solutions

• Require supplier conformance to global Work only with compliance principles factories that support a worker well-being • Require supplier facility audits and corrective action Worker or community plans when necessary Well- development • Collaborate with local NGOs to support worker being program by 2025 well-being and community development projects PEOPLE

*Select examples of activities that Kontoor Brands has already accomplished or will continue to do as a part of meeting our global sustainability goals.

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Planet

Preserving and Protecting our Planet Our brands have a long history of environmental stewardship and compliance, but we know there is more to do.

The world’s resources are limited, and the climate crisis is impacting communities around the globe. We believe companies have a responsibility to use resources wisely, drive sustainable innovations, and preserve and protect the planet and communities where we work and live.

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Our Energy Use No corner of the world will be immune to the devasting consequences of the climate crisis. We have made it a priority to power our operations through clean, renewable energy sources.

Energy Consumption Electricity Consumption Emissions

KTB Facility Type Energy (MJ) Facility Owners Energy (MJ) Supplier-Related Emissions (MT CO2e) Supplier Facilities (Tier 1) Manufacturing Supplier Facilities Non-Renewable Supplier Facilities (Tier 2) Retail KTB Facilities KTB-Related Distribution Centers Non-Renewable Offices Supplier Facilities Electricity Renewable Other Natural Gas KTB Facilities Business Air Travel Renewable LPG Diesel

Power 100% Establish of owned and operated facilities a science-based target with renewable energy by 2022 GOALS by 2025

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Water Savings Over Time Owned Manufacturing Total Liters (in Millions) Average Water Efficiency

Our 35 Water Use Water is vital to human life. It’s our mission to strive to not only use water responsibly, but also to return it, clean, back into Water Consumption the communities that depend on it. by Supply Chain Tier

Save 10 billion liters of water by GOAL 2025

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Our Waste Overflowing landfills and depleted natural resources are caused by linear business models that generate waste. We are committed to reducing waste generation through prevention, reduction, recycling and reuse.

Waste Diversion Rates

Facility 2019 Facility Type Diversion Rate

Hackleburg, AlabamaEl Distribution 99% 6 El Paso, Texas Distribution 98% Seminole, Florida Distribution 100% # of Zero Waste DCs Luray, Virginia Distribution 99%

Mocksville, North Carolina Distribution 99%

Mexico City, Mexico Distribution 99%

Torreon - Torreon Complex Manufacturing 42%

Torreon- Coyote Manufacturing 15%

Torreon - La Rosita Manufacturing 26% 59% Torreon - San Pedro Manufacturing 17% Owned Manufacturing Yucatan - Acanceh Manufacturing 97% Diversion Rate Yucatan - Tekax Manufacturing 53%

Yucatan - Izamal Manufacturing 11%

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Our Product We produce millions of products each year globally. With this kind of scale, transparency and accountability are of utmost importance.

Kontoor Brands aims to source our materials and apparel in ways that are good for people and the planet. We are committed to sharing information about our suppliers, design process, innovative products, material sourcing, and preferred chemistry initiative.

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Design and Innovation

Virtual Design We put thoughtful care into designing Wrangler® Lee® North America North America every product with style, fit, quality and sustainability in mind. Using virtual design drastically reduces the environmental 50% 90% impact of product development.

Estimated Percentage of Products Designed Virtually

Innovation Product Spotlight

The Wrangler® Rooted Collection™: Indigood™ Foam Dye: Five farmers. Five States. Five 100% sustainable cotton jeans. The A revolutionary technique with no wastewater. Indigood™ Wrangler Rooted Collection celebrates land stewardship and state Foam Dye entirely replaces the traditional water vats and pride in a limited, premium line of denim. Each piece was grown, chemical baths of conventional indigo dyeing, reducing by milled, cut and sewn in the United States. 100 percent the amount of water required to turn denim blue. The new process also reduces energy use and waste The Rooted Collection features five state-specific pairs of jeans: by more than 60 percent and results in no wastewater. the Alabama Jean, the Georgia Jean, the North Carolina Jean, the Tennessee Jean and the Texas Jean. The sustainable cotton used for each state’s jean is fully traceable to a family farm in that state. Each state’s design includes a unique wash, as well as trim and patch details featuring the state’s silhouette and other embellishments.

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Our Materials Our designers search the world to find the right materials for our apparel.

While our brands use a wide variety of materials for their products, we’ve identified four priority materials: cotton, synthetics, animal-derived, and forest-derived. Our goal is to source sustainably all four types by 2030.

Cotton: We plan to source 100% sustainable cotton by 2025. “Sustainable Cotton” is defined as traceable fiber with accompanying farm-level data, cotton grown under an approved management scheme or recycled cotton fiber.

Synthetics: We plan to source 100% sustainable synthetic fibers by 2030. We define “sustainable synthetics” as the use of recycled content, bio-based feedstocks, or additives to enhance biodegradability in polyester, nylon or spandex.

Forest-Derived Materials (FDM): Our FDM Policy will be in full affect by 2023. Forest-Derived Materials are considered sustainable when the content is 100% recycled, third-party certified or a combination of both.

Animal-Derived Materials (ADM): Our ADM Policy will be in full affect by 2023. “Animal-Derived Materials” are considered sustainable when the material comes from (a) an animal whose main purpose for slaughter was food production (e.g. leather as a byproduct from cow slaughter for beef), (b) humane extraction processes that don’t necessitate animal slaughter (e.g. wool from sheep), (c) sources that that do not contain domesticated animals and (d) sources that that do not contain fur, exotic skins, or skins from vulnerable/endangered/threatened species extinct in the wild.

This year, due to the current state of our data infrastructure, we are unable to report absolute Source numbers of material content. We look forward to reporting on our materials goal as we 100% sustainable develop our tracking systems. raw materials GOAL Policies and Standards: Read our sourcing policies and operation standards at KontoorBrands.com.

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Factory Compliance To ensure social responsibility and environmental sustainability within our complex supply chain, we expect Preferred Chemistry our contract supplier factories to comply with Kontoor Brands’ Terms of From dyes to finishes, chemicals often play Engagement and our Global Compliance an essential role in building quality apparel. Supplier Principles, which are regularly audited However, if not properly managed, the use by our internal and third-party auditors. of chemistry can contribute to negative These Principles are brought to life environmental impacts and jeopardize Engagement worker safety. through our Factory Facility Guidelines and Factory Audit Procedures. Our goal At Kontoor Brands, we own is for every supplier factory to operate with the same high standards as our and operate world-class owned manufacturing facilities.

manufacturing sites and Suppliers Screened Chemicals Screened by CHEM-IQ by CHEM-IQ contract with hundreds of supplier factories to produce Product Safety 37 430 our products. Every day, consumers around the world have the opportunity to vote with their dollars by choosing which products Our commitment to industry- they buy and where they buy them from. leading manufacturing and Producing safe apparel, whether through View our Restricted Substance List on our owned manufacturing facilities sourcing is powered through KontoorBrands.com or through third-party partners, is of our steadfast focus on the highest priority. Our teams utilize Supplier Engagement, Factory industry best practices, processes and controls to monitor the safety Compliance and Product Safety. and quality of our products and are continually refining and improving our protocols every day. Use 100% preferred chemistry by GOAL 2025

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Supplier Environmental Impacts We are committed to transparently reporting our environmental impacts. By 2023, we will only source from suppliers who complete the HIGG Facility Environmental Module (FEM). Below, we share our suppliers’ energy and water use during the 2019 calendar year. This supplier list is updated as of December 2019 and may not reflect current suppliers.

Water Consumption by Supply Chain Tier

Energy Consumption by Supply Chain Tier

Tier & Type Emission (MT CO2e) Tier & Type Emission (MT CO2e)

Owned: Purchased Electricity 224,362,343 Tier 1: Coal 41,267,663 Owned: Natural Gas & related gasses 1,647,987 Tier 1: Solar Electric 6,587,662 Owned: Diesel & Fuel Oils 1,647,987 Tier 1: Hydroelectric & Thermal 423,217 Owned: Coal <1 Tier 1: Wind Electric <1 Owned: Hydroelectric & Thermal <1 Tier 2: Natural Gas & related gasses 2,288,432,668 Owned: Purchased Steam & Chilled Water <1 Tier 2: Purchased Electricity 460,312,167 Owned: Solar Electric <1 Tier 2: Coal 230,209,203 Owned: Wind Electric <1 Tier 2: Biomass 67,970,578 Owned: Biomass <1 Tier 2: Diesel & Fuel Oils 44,276,379 Tier 1: Natural Gas & related gasses 501,498,582 Tier 2: Purchased Steam & Chilled Water 34,611,747 Tier 1: Biomass 331,987,820 Tier 2: Solar Electric 1,469,981 Tier 1: Purchased Electricity 134,616,501 Tier 2: Wind Electric 158,823 Tier 1: Diesel & Fuel Oils 49,390,913 Tier 2: Hydroelectric & Thermal <1 Tier 1: Purchased Steam & Chilled Water 43,517,143 Kontoor Brands Sustainability Report 2019 20 CEO Welcome About Kontoor Brands Living Our Purpose Our Approach to Sustainability Governance Materiality Assessment Strategic Pillars Planet Product People Appendix

People

Our global community of more than 15,000 employees fosters a culture of collaboration, performance and entrepreneurial spirit. For more than one hundred years, the Wrangler® and Lee® brands have built a reputation for humility, respect and a commitment to doing the right thing.

As Kontoor Brands, we take pride in our rich heritage and are excited for our future. Together, we are dedicated to creating quality apparel that is woven with care, style, and sensitivity to our planet and the people who help make our products.

With our workforce and operations in more than 65 countries, we embrace our differences and learn from the diverse experiences, passions and perspectives of our employees, communities, customers and consumers.

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Demographic Data Driving change starts with providing transparency in where we are in our Inclusion & Diversity journey today. We commit to sharing annual updates with our progress toward our strategic priorities and objectives. Inclusion & Diversity Global Gender

Inclusion & Diversity have been at the heart of our company and ingrained in our values since Kontoor was created. In 2020, we introduced our Inclusion & Diversity strategy and multi- year objectives. This will provide transparency with respect to our 6HQLRU0DQDJHUDQGEHORZ 'LUHFWRUDQGDERYH %RDUGRI'LUHFWRUV $OO/HYHOV journey, establish measurable and visible objectives for the changes we seek to achieve, and put into motion detailed plans to get us Race & Ethnicity where we need to be. (U.S.)

For more information on Kontoor Brands’ Inclusion & Diversity strategy, please visit KontoorBrands.com.

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Impact in Action Our Communities Spotlight From our world headquarters in Greensboro, North Carolina, to the Female Garment Workers Take Charge of factory floors across the world, we’re committed to being actively Their Health with Support from Kontoor involved in the communities where our employees live, work and Brands and HERhealth™ Partnership

play. Living our values means giving back to the places where our Prior to the COVID-19 pandemic, our Responsible employees, workers, and consumers live, paying fair wages and Sourcing teams partnered with BSR’s HERhealth™ project across Bangladeshi and Kenyan factory collaborating with our suppliers for safe, secure workplaces for every partners to increase healthcare knowledge, person in our supply chain. critical health services and products for women in factories that help produce products on behalf of Kontoor and its brands.

Where We Work Kontoor and Wrangler® Make a Splash Below are the core office locations, distribution centers and owned manufacturing facilities for Kontoor Brands. with Water Conservation Efforts In celebration of the launch of Indigood™ Foam Dyed Denim and World Oceans Day, employees from across Kontoor volunteered in support of water conservation and protection. Employees at our EMEA headquarters in Belgium worked together to remove trash and debris from EMEA Headquarters the Port of Antwerp. Employees at our World Antwerp, Belgium Headquarters in North Carolina removed more than 400 pounds of trash from a local waterway. Seminole, OK Luray, VA

Read more examples of our impact Luray, VA in action on KontoorBrands.com. Hackleburg, AL Global Headquarters El Paso, TX Greensboro, NC Shanghai, China Mexico APAC Headquarters Mocksville, NC Hong Kong, China Nicaragua

Mexico City, Mexico

Work only with factories that support a worker well-being or community development program by GOAL 2025 Distribution Center Office Owned Manufacturing Facilities Kontoor Brands Sustainability Report 2019 23 CEO Welcome About Kontoor Brands Living Our Purpose Our Approach to Sustainability Governance Materiality Assessment Strategic Pillars Planet Product People Appendix Appendix

Energy/ Climate • KTB accepts sustainable cotton management frameworks Chemistry and their certifications on a case-by-case basis. Currently, “Renewable energy” is defined as electricity that is “Preferred chemistry” is defined as both process and product KTB recognizes cotton grown under one of the following generated from solar, wind, geothermal, small-scale hydro or chemistry that reduces or eliminates the use or generation of programs: Organic, Better Cotton Initiative, BASF’s E3, Cotton tidal energy. Natural gas consumption and refrigerants are hazardous substances. Excludes licensee products. REEL, and the U.S. Trust Protocol. out of scope for this goal. 1. All suppliers review, sign and accept a Restricted • KTB accepts recycled cotton from validated sources of Substances List. In addition to global facilities that are owned and operated, postindustrial, and post-consumer recycled cotton. leased retail in North America are Europe are also included. 2. Evaluate KTB’s strategic Tier 2 suppliers with an advanced • Alternative fibers based from biogenic sources aligned with Facilities associated with licensed products are exempt CHEM-IQ testing process. Strategic suppliers constitute 90% regenerative agriculture, will be reviewed on a case-by-case and open-air retail, “shop-in-shops,” are out of scope for or more of the product portfolio by weight. basis (e.g. hemp, linen, flax, etc.). this goal. • Must be in compliance with the social labor requirements Science-Based Target will be submitted to the SBTi. outlined in our Cotton Fiber Sourcing policy. Worker Well-being This goal applies to both a worker well-being programs but KTB’s future SBT includes both energy efficiency Forest Derived Materials: also community development initiatives that improve a bigger improvements and use of renewable energy. geography of which the factory and workers are members. 1. “Forest Derived Materials” are defined as products that are derived from wood including man-made cellulosic fiber (e.g. Water viscose), solid wood furniture and fixtures and pulp-derived Worker well-being programs and community development The scope of this goal includes water consumption products (e.g. paper, ticketing). Excludes licensee products. initiatives are not the same as complying with labor regulations but address local needs: Access to water and used in natural fiber production, fabric production, and 2. Forest Derived Materials are considered sustainable when sanitation, adequate health and nutrition and accessible product finishing for Kontoor products globally, excluding the content is: licensee products. childcare and education. a. 100% recycled b. 100% 3rd party certified Water conserved is tabulated annually, with a reported KTB uses a decision matrix to determine the most relevant savings of 3B liters in 2016, an additional 5B liters in 2020, (with a preference for FSC certification) and needed service in a priority sourcing region and will not with a cumulative savings of 8B liters. With this goal, we c. A combination of both qualify a program or initiative that is not addressing a priority plan to save at least 2B additional liters by 2025. The (e.g. 50% recycled content/50% FSC certified content) need. This is to ensure that the investments in programs previously reported cumulative water savings are measured d. Does not come from controversial feedstock sourced and initiatives are focused on the most relevant and from a 2008 baseline from both absolute savings from from Ancient and Endangered Forests contextual need. 1) water recycling, which is measured in total liters recycled, and 2) water efficiency, which is measured in total liters Animal Derived Materials: Qualifying programs or initiatives can either be managed by avoided (through a normalized value of water use per pair). 1. “Animal Derived Materials” are defined as products derived the factory under NGO supervision or managed by an NGO Future reporting associated with this goal will continue to from an animal for use in commercial products. Excludes with factory participation. KTB provides an oversight and use absolute savings from licensee products. investment role. 1) water recycling and 2) water efficiency measures from a revised 2020 baseline. 2. Animal Derived Materials are considered sustainable when the material comes from: Factories are defined as KTB’s Strategic Suppliers, both Tier Materials a. An animal whose main purpose for slaughter was food 1 and Tier 2 are in scope and constitute 90% or more of the production (e.g. leather as a byproduct from cow slaughter product portfolio by weight. Source 100% sustainable cotton by 2025 for beef) Sustainable Cotton” is defined as: b. Humane extraction processes that don’t necessitate Traceable fiber with corresponding farm level-data that 1. Positive Environmental Outcomes – meaningful (Yield improvements per acre/hectare, animal slaughter (e.g. wool from sheep) demonstrates positive environmental outcomes1 over time increased soil carbon (Organic Matter%), meaningful reduction in GHG intensity per KG lint (CO2e per kg Lint), meaningful improved water quality (Edge of Field Ratings), or 2 c. Sources that that do not contain domesticated animals that advance the principles of regenerative agriculture . meaningful reduction in water consumption (liters pr KG lint) while otherwise farming in d. Sources that that do not contain fur, exotic skins, or skins a sustainable manner. from vulnerable/endangered/threatened species extinct 2. Principles of Regenerative Agriculture mean farm practices that limit tillage, protect in the wild the soil, maintain living roots in soil, increase biodiversity, efficiently manage water, use integrated pest management, and rotate livestock when possible.

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